Brian Walden
Hello, and good afternoon. Today Weekend World comes from No. 10 Downing Street. Seven months into her second term of office Margaret Thatcher is in an unparalleled position to fulfil her aim of changing Britain fundamentally. With a huge majority in the House of Commons and the political opposition divided between Labour and the Social Democrat/Liberal Alliance, she still has nearly 4½ years to go before she need call another General Election. It is unlikely that she will ever again have a better opportunity for the radical action she has always promised. However, recently an increasing number of doubts have been voiced about her intentions. Even some of her supporters have said they have detected more and more signs that she is no longer pursuing the course she set herself before she became Prime Minister in 1979. As a result, there is growing uncertainty about where Mrs Thatcher intends to lead Britain during the remainder of her second term. Today, in a live interview, we hope to find out. We will be asking the Prime Minister about domestic policy, and in particular the areas of public spending, taxation and the size of the state, because it is in these essential areas that the signs of a loss of direction are said to be most apparent. We will also be asking the Prime Minister about a quite separate issue raised by today's Observer newspaper. The Observer says that in 1981 the Prime Minister's son, Mark Thatcher, acted on behalf of a major British construction firm which was attempting to win a Middle East contract at the same time as Mrs Thatcher was using her influence to secure the contract for Britain. In an editorial article the newspaper suggests that the Prime Minister was insufficiently aware of the possible conflict between public and private interests in this matter. We will be asking Mrs Thatcher to comment on the Observer's story. First, though, let's hear the latest news headlines from ITN and Alastair Stewart.
ITN News with Alastair Stewart
Brian Walden
Prime Minister, before I come to the main body of the issue, can I ask you a question that arises from the lead story in today's Observer newspaper which you will have seen and which many viewers will have seen. And this says that in 1981 you were engaged on behalf of the British Government [end p1] in securing a contract from the government of Oman for a British building firm in which your son was connected and the Observer in its leader suggests that in that matter you have shown an insufficient regard for the distinction between public and private responsibility. Now would you care in fact to comment on that allegation?
The Prime Minister
Yes, of course. You want to know what my role is when I go on these tours trying to get jobs for Britain. In 1981 we undertook a very extensive tour starting in Delhi and going to five other countries in the Gulf. I have one role when I'm trying to secure contracts for Britain—it is to try to get the business for British companies and not for overseas companies. I bat for Britain. I don't distinguish between British companies, I can't. My concern is where there is business, that the heads of government there who decide the country to which the business should go, and the company to which business should go shall know that our Government here backs its own companies. I don't distinguish between them. I never have. But in that tour we got hundreds of millions of business for Britain. Many, many jobs, and I am pleased with each and every one of those contracts that came for Britain. And if my advocacy succeeded in getting them for Britain then I am very pleased about that too. What worries me is not the contracts we got for Britain but the ones that went overseas. It is those that I want to go after and say, why didn't we get those here as well? Some I know failed on price, but the company overseas does the detailed negotiation, the country overseas does the detailed negotiation, and if they fail at that stage then there is very little I can do about it.
Brian Walden
Well, Prime Minister, it is not a matter I want to pursue in any depth whatsoever, nor indeed could I if I wanted to. It is the Observer that claims to have evidence on this—not Weekend World. Let me just put this to you. Your answer, necessarily, satisfies me because, as I say, I have no details that would lead me to press you any further. It is bound to come up in the House of Commons. Do you think that the answer that you have given me will satisfy the House of Commons? [end p2]
The Prime Minister
I answer in the House of Commons for my role. My role is I bat for Britain in contracts. I shall go on batting for Britain in exactly the same way. I shall try to get as many overseas contracts, orders from overseas, to this country as I can and I'd be very worried if I didn't.
Brian Walden
All right, Prime Minister, and with I must confess some relief, can I now switch to what I regard as the important point of the interview which is to talk to you, by the way not about anything that you have not yourself said you regarded as absolutely central and crucial to your vision of what Britain should be, but to concentrate on that very vision itself, and it was a clear vision, it was a vision of a reduced role for the state, with reduced public expenditure thereby producing reduced taxation. Now some people say, ‘ah yes that's what she used to say, but force of circumstances has pushed her off it’. Or worse still, some people say ‘she has abandoned it altogether. You are not going to see any radical Thatcherism in the second term of Government’. Now is that true, Prime Minister?
The Prime Minister
But I think we are already seeing quite a lot, but I am not quite sure where you want me to start. We did come into power with the determination to reduce the role of the state. I believe passionately in certain roles for Government, and the rest for the people. And let me perhaps sum up and put it best in this way. I believe you need very strong Government to be strong in those things which only Governments can do. And strong enough after that to leave the rest to the people because that is the essence of a free society. The freedom of the people within a just rule of law and within a democracy. So Government has to be very strong in defence. We have been so. Government has to be very strong in seeing that there are enough forces of law and order. We have increased them substantially. Government has to be very strong in trying to hold the value of your currency stable. The record of this Government and my last one on inflation is excellent and will continue. Government also has to set the framework of law in which your industries and commerce can operate. We [end p3] have reduced many, many of the regulations which stop them really from carrying out their own function of management and enterprise. Government also has to provide certain basic social services as a safety net, and it is accepted now that we have a National Health Service, and after all you can compare my record on that with anyone else's, and that we provide the overwhelming majority of education. I've set out to see that we do those things. I've also set out to see that we do them in a way that demonstrates maximum efficiency with the money we have, and consideration for the fact that every pound we take out of people's pockets is a pound they have not got to spend on their own families, or on their own businesses. So that is the broad general philosophy and I have, I believe, been the head of a very strong Government, strong in those things, and strong equally to say over to the people for the rest because if the spirit of enterprise, of initiative, of responsibility is not still within our people, and I believe it is, then there would not be hope for the future of Britain, but I believe the character of the people of Britain has not changed.
Brian Walden
All right, Prime Minister. Let's come to the very heart and core, the warp and woof of what commentators have called ‘Thatcherism’. What you were talking about before you were elected in '79 and frequently since you were elected in '79 and this doctrine says ‘the state is too large and does too much for too many people and it costs too much. Public expenditure is too high, and the tragedy about that is that the Government has no money, so somebody has to pay for it so having public expenditure too high means that taxes are too high’. Now you said that that must be reversed from the '79 position not only because it was the only way to get decent economic growth, but because it was the only way to maintain a free capitalist society in Britain. Now do you still believe that central tenet of your old doctrines?
The Prime Minister
Yes. Now let me tell you exactly what we've done and why we've done it. Let's tackle public expenditure. It's I and my Government who tries to keep it under control. Very hard because I believe in the things that you have been saying. As you know, when we came back into power in 1979 we faced another enormous oil price increase which put the world into a second recession, deeper than the first. You'll be very much aware that with Government expenditure, many of [end p4] your expenditures continue even though your growth rate falls and is not easy to reverse those expenditures, they have to continue and really the trick is to hold them. I don't think that there has been any government which I remember in the post-war period which has actually been able to reduce expenditure from one year to another. And if you can hold it then you are doing very well. Now we tried to hold it. But to some extent because growth had fallen it became a bigger proportion of our national income than when we took over. I must make this clear: it did not become such a big proportion of national income as in the previous recession under Labour. That, of course, is down to us trying to constrain public expenditure. Now let me tell you how I see it now. I still believe that we have got to constrain public expenditure, because of the positive side. That I believe that people are entitled to have more of their own earnings in their own pockets. I believe that the new jobs and that a higher standard of living comes not from Government creating bureaucracies, but from commerce and enterprise starting up and expanding. So people are entitled to more of their own money in their own pockets and that is a laudable objective. And that companies that want to start up or expand need to have more of their own profits to plough back. So the whole philosophy is there and I believe passionately now that if we want more jobs we have got to carry on in the direction of my philosophy; hold your public expenditure and let the growth go where it should into creating more business and more jobs. And that is why we are constantly having the struggle to hold it.
Brian Walden
All right, Prime Minister. But you do see where the doubts come from don't you … .?
The Prime Minister
… Carry on asking me … .
Brian Walden
Well, yes … I will carry on asking you. The words you have given me are absolutely impeccable and anyone looking at just the words without looking at the record of your Government would say it is quite clear what Margaret Thatcher believes, she believes what she's always believed. The problem, Prime Minister, and I put this to you, is the deeds of your [end p5] Government for whatever reason, it is the case, isn't it, that public expenditure which is about 40%; of G.D.P. when you came to power in ‘79 is now about 2–3%; higher than that. That taxation is higher now than when you said the burden of taxation was quite intolerable in 1979. And I have a number of your speeches here which you remember well, you said in Cardiff ‘taxes can and will be cut’. But the burden of taxation has not in fact been reduced, that's where the doubts are, Prime Minister, people say ‘ah yes, she says one thing, but she and her Government do another.’ Now what is your answer to that? [end p6]
The Prime Minister
Well now, you've raised two things, let's try to tackle them as they came. Public expenditure. I indicated part of the reason when I last replied. Yes, as a proportion of national income, it is higher now than when we took over. It is lower, the peak that we reached was lower than the peak the Labour Party had during the last recession, so if you're comparing recession with recession, we did better on the actual proportion. I hope now to continue what we've started to do, which is, you know, but didn't mention, we're reducing public expenditure again, as a proportion of national income for the very reason that I want to make room for tax reductions. I may say I'm not being helped exactly by any of the opposition, whatever party in the House of Commons, who all want to have more and more spent without having any regard as to where the money comes from, so peak recession compared with peak recession our record is better than that of the Labour Party and we're now taking the proportion down. Now that's on public expenditure, it's still going to be a battle to hold it, because so many people want to spend more on things. We have to add up the sums and speak for the majority of the people who say ‘Hey, we want more of our own money ourselves, and more's got to go into business’. Now let's just take you up on some of those things you've said about taxation. Let me make this clear. A family—an average family—on average earnings, is doing better on taxation now than they were under the last Labour Government. That is to say, we've increased the allowances, we've put up the thresholds and only have to pay tax over and above the threshold. We've put it up in real terms, so if you take it on income tax alone, we have done better …
Brian Walden
But I don't, Prime Minister …
The Prime Minister
One moment—no, you don't, but let me finish—the average family has to pay direct taxation and the threshold over and above which they have to pay is higher because we did that. They also, of course, the average family have considerably increased earnings, so their real standard of living is considerably up under a Conservative Government—the facts are all there. [end p7] Now what my opponents do, is they say ‘well, don't just take the tax, add those national insurance contributions which you have to pay’—but I may point out they are not a tax, they are an insurance contribution which if you don't pay, you don't get the benefits, and the original equation was—the Beveridge equation was—everyone pays a weekly national insurance contribution for absence of earnings caused at absence, caused either by unemployment, either by sickness or by old age, and it is an insurance contribution which is why if everyone pays it, they get the benefits, if they don't pay it, they don't. Now, my opponents are the first to say ‘please, we want higher benefits’ and I regularly say to them ‘look, many of us would like to give higher benefits, but where do you think those higher benefits come from?’ They come from being paid for by the present working population of Britain. Now I have to be fair as between those who get the benefits and those who pay for them, and what my opponents are doing is saying two things at the same time ‘please, we want lower taxation, but please, we want higher expenditure and higher benefits’ and it's crazy, it's irresponsible, it doesn't add up and I have turned round and said to them “what you are saying is that the working population of this country, upon whom we all depend, are not paying enough tax, you want them to pay more. Now why, when you demand more, do you not say that means the working population paying more, which means they have less to spend on their families?” Now is there anything I haven't answered?
Brian Walden
Well, I don't think so, Prime Minister, it was a very, very comprehensive answer, but of course there were bits of it that I want to take out, and not from the point of view of the argument of your political opponents either, but from the point of view of what historically you yourself have always believed. For instance, let's take this question of the various accidental factors—if we might put them like that—which you say have forced public expenditure up so that it's now higher than it was when you took over saying it was then too high. I'd be rather more reassured about your intentions here were it not for the fact that your future plans are not to cut public expenditure, they are to hold it at the level in real terms that it has now reached. Now again, Prime Minister, I put it to you—why? Why don't you cut it in the way that a lot of people thought you were going to when they voted for you in ‘79? [end p8]
The Prime Minister
Because when I look at each and every one of the programmes, if we carry out what I am doing now, say we can't allocate more expenditure to them except in accordance with the plans we've published, we can't add more to them in so far as we need to do more, we have got in fact to get better value out of what we're spending and believe you me, there is plenty of scope for that, we've got to learn to get more out of existing expenditure. So we are going for efficiency as no other government has gone for it ever before. Look at the National Health Service. More and more money has been poured into it. I'm always interested that I'm often compared, the way I tackle things, with the way in which Harold Macmillan—whom I greatly admired—tackled them. Do you know, in the National Health Service we now have nearly twice as many people employed now as he had in his time? I look back, in 1962 we spent one thousand million pounds on the National Health Service in his time—it's fifteen thousand million pounds now. Now, it was a much smaller proportion of income tax then than it is now. Now it takes half the yield of income tax. Now I've watched this go up and up and I—every common sense tells me—it doesn't matter how much more you want to do, it can't go on going up like that, so we have to look at how come we've got all of this extra staff and expenditure. Is it possible that we can get more out of what we've got? And we are vigorously going for that. How come that it costs three times as much to deliver a child in one specialist maternity hospital as in another? How come it costs 30%; more on an ambulance service in one authority than another? Now that's the angle I'm taking, and going that way we shall be able to hold public expenditure. I must be absolutely candid, I do not believe it is possible to cut public expenditure below the plans we indicated. I do believe that we can hold the totals. If you have for one reason or another to spend more in one department, then you'll have to reduce in another to hold your total. But that is realistic, I believe it is fair, we're getting growth now, and I want that extra growth to go in the direction I've indicated, but yes, I believe certain things fervently, yes, I'm realistic. Thirdly, the people who are working have their standard of living increased, the people who rely on public services often have better public services now than they did under the previous Government, but I'm going on to—I hope—to do more with the same amount of money by tackling it in the way I've indicated. [end p9]
Brian Walden
All right, I might press you specifically on some of that, Prime Minister, but can I just put this to you first—two things really. Your point of view may be realistic and it may be fair, but I put it to you quite bluntly. It's very different from what you were saying before you became Prime Minister. This is not cutting expenditure, this is, for all the splendid reasons that you have given me at such length, this is stabilising expenditure where it is, and that's a difference, isn't it?
The Prime Minister
Well, no, I think the real point about public expenditure is its proportion in relation to the total national income. Yes, its proportion is higher now than when I took over for the reasons which I have indicated. I believe that when we get growth going—and it's very difficult because we have got it going now—the demands are coming in for higher public expenditure and I'm trying to hold it, and I believe if we're successful in holding it, that will help to get the next generation of growth going, and I believe that I shall be successful and I believe that, not only myself, but many other governments are now Thatcherite. They are realising, taking all of the performance as a total, taking the balance of public expenditure with private, that I've about got the balance right bearing in mind the circumstances, and that they are following me in trying to hold public expenditure, and following me in not trying to borrow too much.
Brian Walden
But you see my problem, don't you Prime Minister …
The Prime Minister
No, not quite.
Brian Walden
Well, I'll tell you—we're always frank with each other and I'll tell you my problem—my problem is not to work out whether other governments are Thatcherite. My problem is to work out whether your Government is Thatcherite. [end p10]
The Prime Minister
Well …
Brian Walden
Let me put it to you quite bluntly. If you say that all of these things are going to happen through growth, which is something that you used to rubbish as the kind of things that governments always talked about but never got, can you therefore give me a pledge that by the end of this Parliament, the level of public expenditure will be lower after eight or nine years of your Government than it was when you took over?
The Prime Minister
Well, now, look, we're getting a little bit confused. I've been talking about …
Brian Walden
I'm not.
The Prime Minister
Well, I thought you'd swung, with very great respect, and I sometimes don't necessarily confer to. There are two things, the absolute level of public expenditure, which I've indicated to you, has never in history gone down. Never.
Brian Walden
And as a proportion of GDP …
The Prime Minister
And as a proportion of GDP.
Brian Walden
Will you pledge that? A reduction as a proportion of GDP?
The Prime Minister
I've tried to do everything possible to get the proportion of GDP down. We are now getting it down from its peak. [end p11] The level which public expenditure takes, and I think probably I'm doing it more vigorously than anyone else. There are two things we started on, public expenditure and direct taxation. Now, may I just say one thing about direct taxation, because you know when we came in, the standard rate of taxation was thirty three pence in the pound. We knocked it down to thirty. The top level of taxation on earned income was 83%;. We knocked it down to 60%;. We have put up the thresholds so that more people come out of the tax, so on direct taxation we've knocked down some of the corporation tax. On direct taxation we have in fact gone some way to carrying out our pledges. I wish to go further.
Brian Walden
All right.
The Prime Minister
On indirect taxation, and I made it perfectly clear in that 1979 manifesto, that as the balance between indirect taxation and direct we wish to switch, so that people paid less direct taxation, and then had the choice as to whether they put it into paying value added tax, customs and excise and so on. That we have done, and I hope that we shall continue to be able to get direct taxation down …
Brian Walden
Let me ask you about that …
The Prime Minister
And the public expenditure, I have had to put things up on defence and on law and order, and also actually we've put it up on the National Health Service, on education it's come down, because the number of pupils—about a million below what they were when we came in. And I stand absolutely on my whole record, which has gone in the direction in which I indicated, which will continue to go in that direction, and when applied to the circumstances which we've found, we have been realistic and fair and we've gone in the direction we indicated and we shall continue to go that way. [end p12]
Brian Walden
All right, Prime Minister. I asked you a pledge as to whether as a proportion of GDP, public expenditure would be lower at the end of this Parliament than it was in ‘79, and I don't think you gave me that pledge, perhaps being cautious …
The Prime Minister
I hope so—I am naturally cautious, I hope so, I shall strain …
Brian Walden
You hope so. All right, now let me ask you about tax then …
The Prime Minister
One moment. I shall strain to make it so.
Brian Walden
All right.
The Prime Minister
And that's why we strain to hold public expenditure now. not for the sake of holding public expenditure, but because of this belief that people are entitled to more of their own earnings and their own income, and because of the belief we've got to get more of what we earn into the expansion of industry and most of our exports come of course from the private sector.
Brian Walden
All right. Now let's take this very point of the right of the people to retain more of their own income. Will you give me a pledge? If you can't emphatically, you can only hope that it will happen on expenditure, can you at least on tax give me the pledge that at the end of an eight year Thatcher Government, the general burden of taxation, direct and indirect, will at least not be higher that it was when you first came to power? [end p13]
The Prime Minister
I shall strain to make certain that is so. A lot of it will depend on circumstances, some within my control, some outside my control. But you cannot doubt, and neither can anyone else doubt, that I shall strain to go in the direction which I indicated, that I shall do everything I can to try to get the burden of taxation down. First because of my passionate belief that that is right, and secondly because judgements that I make try always to go in that direction, but I must be realistic about the speed at which I can go, and about certain other things, and certain other things do matter. Law and order in this country and backing the police matters very much to me. Being able to defend our freedom and way of life and our democracy matters very much, and it will depend upon how far we can get the new businesses starting, the expansion going, how far we can get the growth going in to the private sector.
Brian Walden
All right.
The Prime Minister
But I indicated that we have in fact done much better on income tax than our forebears. There are problems with trying to finance pensions and just let me give you one, the number of old age pensioners now is six hundred thousand more than it was when I came in, so we've not only had to put up pensions, each and every person, we've had to provide over six hundred thousand more. I don't provide them. It comes out of the contributions of the working population. Now I just can't ignore that. I can't just say ‘well, we've got to hold it exactly’ unless we cut benefits, and I have to be fair. Between the demands of the pensioners and their problems, and between the demands of those who have to provide the money.
Brian Walden
All right.
The Prime Minister
And we have been fair, and I will stand up to anyone and say we've been fair, and we're still going in the direction in which we wish to go and many other people are following us. [end p14]
Brian Walden
Answer me this, Prime Minister. What you've told me, I take it, is that your general objectives both on public expenditure and on taxation have not varied, you would still like to delay, but the practical difficulties of doing so grow all the time. And that you'll do your best, but you can't give any solemn pledges, now …
The Prime Minister
Can I just … .
Brian Walden
Let me, let me ask the question.
The Prime Minister
All right.
Brian Walden
Some people, of course, put a quite different construction on this. They say, ‘ah, yes, it's a lot more complicated than Mrs Thatcher ever lets on. Look at her own cabinet. Take an impeccable dry, like John Biffen. When you question him closely, he says, tax cuts, come off it. They can't possibly have a high priority, it just isn't on the cards. When you ask Mr Lawson …
The Prime Minister
I do not recognise that précis of anything that John BiffenJohn has said.
Brian Walden
Oh, yes, he's told me, when I interviewed him, that tax cuts would necessarily have to have a low priority because of the Government's … mainly much what you've told me, by the way. However, it's Nigel Lawson I'm more interested in, and I put him to you as an example.
The Prime Minister
I've looked at what John had said and I think what he was saying is that we want to have the, and I think Nigel Lawson was saying the same thing, that tax cuts were coming from growth. [end p15]
Brian Walden
No, they weren't. They were saying quite different things.
The Prime Minister
Well …
Brian Walden
Let me put what Nigel said to you, Nigel, to me. Nigel Lawson said, in the Sunday Express actually, he didn't put it only to me, he said that cutting taxes had a very high priority indeed, it had got to be done. That if you struggled on with this level of functions and benefits etc., then all that would happen is that you would never cut taxes. Now, Prime Minister, isn't it true that in your own mind to some extent, and certainly in your own cabinet, in the most civilised way, this argument is raging and is still unresolved?
The Prime Minister
No, I don't think so, because I think, naturally, you're trying to take to extreme conflict whereas I am saying I have to balance the whole thing and the accusations that come against me, if I might say so, is that I'm being too tough on holding public expenditure …
Brian Walden
Not from me, you're not.
The Prime Minister
No, not from me, but for many I'm being too tough on holding public expenditure. I am being tough on holding it because I believe passionately that we do not want it increased for the reasons I've said, and I also believe there's a lot of scope for doing better with every pound that comes into government receipts. A lot of scope. But John Biffen and Nigel Lawson, both I think agree on the same thing, that we've got to hold it and we've got to get the growth going into the private sector, which is on reduction in taxation and I think we all put great store by reduction in direct taxation, because that's the way we've gone, as I've indicated, from thirty-three to thirty pence standard rate in the pound, lower on corporation tax, higher thresholds, we've done by direct taxation exactly what we said, so I don't see the difference. What I see and I know is, yes, it does take me to keep a very firm hold on public spending, and that if I hadn't, you'd have had your taxation up much, much [end p16] higher than it is now. And there are many people who are prepared to say “have higher taxation” . I am saying, I think that people say “look, we don't keep enough of our own money” , and I think that in the longer run to allow them to keep more of their own money which is their title and their right will do better by incentives and expansion to allow more money to go into British companies where they have more to plough back, where there is money to expand, is the way to get growth. Now, I haven't waivered, Brian, and I shan't waiver. I shall battle to keep public expenditure down to the plans that we have indicated and I shall continue to battle because I still believe we can do better with the amount of taxation we're taking in and we can spend it better and get better value out of what we're spending, we've got now, and therefore the improvement in public services should come out of better value for money and not out of increased taxation.
Brian Walden
All right. Let me put back to you, Prime Minister, and I'll leave the efficiency argument, because all governments are in favour of efficiency, and it's certainly an old-fashioned view of mine that it's dropping functions that saves expenditure. I'm not …
The Prime Minister
Some of that we do, yes. I can tell you about that too.
Brian Walden
Well, no, no, no. Let's stick to Lawson and Biffen. You see, I'm not suggesting that, indeed they personally like each other very much, I'm not suggesting there's a bitter punch-up every time they meet in cabinet. What I'm suggesting is something more subtle and more true, that they are fundamentally saying quite different things and as you've disputed, let me read what they say. This is what Mr Lawson said in the Sunday Express, a few months ago. “If Government continues to provide all the same services, functions and benefits as it does at present, state spending is likely to rise even higher in relation to the size of our economy.” [end p17] And he went on to say: “The overall burden of taxation has yet to be reduced. It's a task we have to tackle.” Now, listen to Mr Biffen. He doesn't say it's a task you have to tackle. He says: “Tax cutting has a priority that must be set alongside other responsibilities. It has to be secured against the very realistic reappraisal of the Government's responsibilities to public spending and for borrowing.” And that sounds much like, more like what you've been telling me this morning. So, what I'm asking you is this. Which way do you, in the privacy of your office, incline: towards the Lawson claim: ‘We've got to get on with some tax cutting’, or what John seems to be saying, which is, ‘Of course we'd like to, but it isn't that easy and steady-as-you-go’. Which way are you going, Prime Minister, Lawson or Biffen?
The Prime Minister
Actually we all have the same objectives. As John BiffenJohn started off, tax cutting has a priority, started off …
Brian Walden
Mmm. Yes it did. But who knows the rest of it, set alongside other responsibility. That sounds just like you.
The Prime Minister
Let's have a look at the methods.
Brian Walden
You're a Biffenite …
The Prime Minister
No, no. Let's have a … I am a Thatcherite.
Brian Walden
I begin to wonder, you know, Prime Minister.
The Prime Minister
I am a Thatcherite. We have the same objectives. We all believe not that Government should dominate the people but the Government should serve the people and part of that is not taking too big a burden of tax. [end p18]
We then sit around the cabinet table and say exactly how we're going to do it. And I have done, and Nigel LawsonNigel has done, and John Biffen, we've all done, as a whole cabinet, very well in holding our total public expenditure, this year and the next year and the year after to what we said it would be when we fought the election. Hold the total. When you hold a total and one department has to have more, because the demands we can't foresee, another has to have less. And we held that total because we wish to secure the other objective. And we've held that total and battled to hold that total because we do also give priority to the other objective. Yes, of course, I have a cabinet, who's not only a cabinet in collective charge of the Government's strategy but they each of them have certain departments and now and then I just have to sit back and say, you're not only responsible and they know, as Secretary of State for something. We are jointly responsible for the strategy of the Government and that is why this time we held public expenditure against a very, very difficult background. Against people saying they wanted more and we held it because we want to make room for increases for the family, for business, and please do not underestimate that that was the result of our public expenditure plans. Some have been published and the next will be published. And you try to make differences. I think you'll find very great similarities. And my goodness me, if we weren't very firm, the public expenditure would go up and up and so either would the taxation or the borrowing. Either, in my view, would land us in difficulty and I say that and also point out to my cabinet, look at what's happened to governments that said, “up and up shall go the public expenditure, up and up shall go the borrowing” . They came in on that. What happens? They're all Thatcherites now.
Brian Walden
Well, I'm delighted to hear it, Prime Minister. Obviously, we shall start to come towards the end of this section. So, can I ask you an upsumming question as it were. You keep telling me, and I'm not actually denying it, that due to strenuous efforts you have managed to keep the rise in public expenditure, over the last four years, to a comparatively modest level, and that you have the highest hopes, in the next three years, to peg it at real terms, and if you get some growth, you might actually reduce it as part of GDP. [end p19]
That with regard to taxation, yes, that's up as well, but some taxpayers have done rather better because there have been income tax cuts at the top end and there have also been…
The Prime Minister
And standard rates.
Brian Walden
And standard rate cuts.
The Prime Minister
And increases in thresholds.
Brian Walden
Though the overall burden…
The Prime Minister
Run throughout.
Brian Walden
Sure. Though the overall burden is, in fact, higher.
The Prime Minister
Well, not on income tax.
Brian Walden
No, no, of course, not. But on taxation in general. But if we, that if you slog on for another eight years you may get back to the position, and here's the sting in the tail and what I want your comment on, you may get back, with a tremendous effort, to the position that you so virulently condemned as existing under Prime Minister Callaghan in the election of 1979. Now, doesn't that worry you? Doesn't that dissonance between words and deeds worry you? [end p20]
The Prime Minister
No, because what you are ignoring in all your questions, and I see why you are doing it, is the fantastic world recession and every other country has been in a similar position and frequently in a worse position because they have actually borrowed money. They've sorted out their problems, not what I would call by honest finance, but by saying, “all right, we'll just borrow” . And you tell me the number of countries which is in difficulty now because he's got an enormous deficit, which is an indirect way of putting up public expenditure because of the interest you'll have to pay on it, the mounting interest, and is worried about it. And they are envying us because facing the problems of world recession, I did not go into the bank again, again and again. I tackled it honestly. And that is a plus point which many of them wished they'd got. You're trying to ignore all of that. You're trying to ignore our performance against that of other countries in the same world. The world recession is one thing, of course, technology and the rate at which we can embrace it is another, let's not get on to that. But my performance against that of other countries in the real world is such that the majority of them are following us and not us following them.
Brian Walden
All right, Prime Minister. Let me assure you, by the way, it would be difficult to ignore you at any time but for the moment we must take a break. We'll be back in a moment.
BREAK [end p21]Brian Walden
Prime Minister, in the first part of this interview we went, I think you'd agree, pretty thoroughly and in some detail into the whole question of public expenditure, taxation, the role of the State. But it's always been my opinion of you, and indeed the opinion of a lot of other people, that though you are certainly Prime Minister and though you are certainly head of a political party you are also a moral crusader. That that's what politics in a way means for you and I want to check out on that.
You mentioned a lot of the practical difficulties—we've discussed all those—I don't want to raise them in that form again. I want to put this to you. Allowing for all the practical difficulties, allowing that you can't always do what you want to do, do you still have the same moral, passionate belief that the role of the State must be reduced? People must do more for themselves, they must take more responsibility for their children's education, for their health and all the rest of it? None of that's gone, has it?
The Prime Minister
I still believe that the role of the State is too big and that it has got too big and unless we try to curb it and take steps to curb it, whether it be in trade or in other areas, then, it will almost challenge some of the fundamental things I believe in. You see, perhaps one can explain it this way, a redistribution of wealth between the people and the State comes also to be a redistribution of responsibility. Whilst people start saying to the Government, “we have a problem, you've got to solve it” , for every problem a subsidy, once they start saying that, then they are taking away from their own responsibility and they are really saying that they understand that if the Government has to solve all problems, it will have to take everything away from you, and once Government starts going down that road, then they are almost treating people not like adults but like children. And it's this redistribution of responsibility that I'm going on about, a free society. I remember George Bernard Shaw saying something once, “freedom incurs responsibility. That's why many men fear it.” You cannot hand over your responsibilities to the State. The State is there to enable you really the better to discharge your own responsibilities, but not to substitute for them. [end p22]
Brian Walden
But, Prime Minister, someone who holds your view must find very real difficulties then, because there is no doubt at all is there that in the real world a very large number of people, possibly the majority in British society, do want the State to take a whacking great responsibility for them, and cough the money up to do so. You must find it very difficult to struggle against this direction of public opinion, don't you?
The Prime Minister
I think part of that is due to politicians, and sometimes I've got very worried that it seems as if general elections might become a kind of public auction. Vote for me and I'll get you more, without seeing the other side of the equation. And where's the more going to come from? It's no longer going to come from someone else. It's going to come from almost each and every person in this country, because we all pay taxation. And I therefore am constantly trying to say, “look please take more responsibility yourselves because quite honestly you spend your own money better.” It's very interesting, there is an [OECD] O.E.C. document out, a new one now that's going to be discussed, and it puts it very vividly. It says that you take away large sums of money from ordinary people and you put them through the State machine, a large number of them to be given back, and quite a number of income levels now, what we are doing is taking money out of one pocket by taxation, only to give it back into another pocket by benefit. But the amount that comes out is greater than the amount that goes back, because it goes through a big bureau, and O.E.C.D. calls that churning. And because of the growth of demands in this way, yes I do have to look at it, and we are trying to lay the facts before the people, because, but it's not only financial, it is if you're a free society you can only do it by taking the responsibility of a free people.
Brian Walden
I'm not too anxious … I found that a very interesting answer. I'm not too anxious, by the way, to press you on details, we had that in the first part, we went into a lot of detail there. I'm much more interested in how your own thinking operates. You see, you admit yourself, I mean the O.E.C.D. talk about churning and all that, yes, but the British people are very used to churning. They like a lot of churning. They get very frightened and worried when they don't have [end p23] churning, when they don't have money taken out of one pocket and stuffed into another. This is really difficult for you isn't it?
The Prime Minister
No.
Brian Walden
It gives you great problems.
The Prime Minister
No. No.
Brian Walden
Why?
The Prime Minister
It is not going to be difficult, because I simply try to challenge people who try to get the debate, I'm not talking about you but in the House of Commons, only on a matter of more for people out of public expenditure. I have to challenge the whole time to say, look, what you are saying is that there is more taken from the people and therefore less responsibility for the people. And the fact is there are two things, not only the money one which we have dealt with, but people do not like it when they have to queue up to ask for services from the State. When they have to be in a queue whether it's for housing, and look my goodness how we've changed the balance of that, because I believe that liberty is partly dependent on people owning their own property, when they have to queue up for housing. When they have to queue up for waiting lists and one thing or another. When they have to queue up means tested benefits. And if you're going to take more and more out, there comes a time when you're taking so much away from people that they can't keep themselves and then they go and have to queue for means tested benefits. And then there are …
Brian Walden
All right. [end p24]
The Prime Minister
No, I just haven't finished, because it is very important. There are two safety valves in this which the British people know. One is that they do not want more taken out of their own pockets and they also see a good deal of waste in the public sector, that is a safety valve. And secondly, they do not like being treated as a pawn of the State or having to queue up for everything. So they have built in a limit and that really was why I came back into power. Because they said socialism has gone too far and as one of them said to me, ‘for the first time in my life, Mrs Thatcher, I'm going to vote for you’ and I said as a matter of fact ‘why, if you haven't voted for me before?’ She said ‘because the other lot have taken the centre so far left that you've got to pull it back’. And that is right. So I am absolutely in tune with how people feel, because of what they feel in their pockets, but more than that because of what they feel in their bones, in their blood stream, in their heart of hearts, in their minds.
Brian Walden
All right, I mean the most crucial question really of the interview and indeed, not of the interview because interviews although they have their own importance are not vital. What's vital is what happens in the years ahead while you are in Government. The most vital thing is what you're actually going to do.
Let me give you one example, and I don't want details of the health service, I just want to give the health service as an example to you. You keep saying, “it's safe with me,” and I don't see on the amount of money you're spending on it that anybody wants to say that it isn't safe is going to have an easy case to make. But ought it to be safe with you? Ought you not to be saying to well-to-do people, who could well afford to buy their own health care, ‘look you have holidays in the Algarve, you have twenty thousand quid cars, can't you at least pay for your own health?’ That's the sort of approach I would have expected you to have taken some years ago, now you don't. Why? [end p25]
The Prime Minister
When we came back into power there had been a very great effort to stop private health services altogether. That is an indication of how far socialism had got to try to stop the fundamental choices of a free society. We had to reverse some of those, because in a free society people are free to spend their own money as they wish, and you cannot stop them, you should not attempt to stop them spending more on private health. We now have, I think, about four million people who are insured to provide their own. I firmly believe that when more people in fact get more of their own money in their own pockets, they will choose to go that way. And that is, I believe, one of the things about growth that will come about that way. So that is the way in which we are tackling the health service and also saying that we really must have a look at the management of the whole thing to get more out of the money we are spending on it. But, in fact, the thing has shifted towards my viewpoint. The right to spend money on private health would have been extinguished under socialism. I mean it seems to me utterly appalling that that should ever have been, that they should ever have been going that way, and so on private education as well. And actually it's vitally important, not only for the people that go that way, but for the judging of standards in the National Health Service and in education, that you have a private sector, so also they see what can be done with the money and with the standards.
Brian Walden
Prime Minister, I only gave the health service, of course, as one example of the whole general process and I put this to you as a question very near the end. Are you telling me that in the hard realisms of education, health, the way people live, the benefits they get, the pensions they receive, and all that, at the end of this parliament you will be able give me some sort of pretty quick check list of the way in which the British people have become much more reliant, much more Thatcherite, much more in line with the type of capitalist thinking that you have always agreed with? You actually see that happening at the end of this parliament, do you? [end p26]
The Prime Minister
I can give you a check list now.
Brian Walden
Well don't, don't.
The Prime Minister
I can give you a check list now of the way in which we have tackled vested interest.
Brian Walden
Ah, that's what I thought you were going to say.
The Prime Minister
Whether it would be trade unions, stock exchanges, opticians, then we shall tackle the conveyancing. I can give you a list now of the things that used to be in the public sector that we have put into the private sector, and we shall go on doing this. I can give you a list now of the regulations which we have got rid of. For fifteen years we were subject to incomes policies and prices policies, of one sort or another. And the thing is that having got rid of those things I have done better on inflation than any other Government for a very long time and I'm going to go on.
Brian Walden
I must, I must … .
The Prime Minister
Now how much longer do you want me to go on?
Brian Walden
No, I don't. I must stop you, stop you there Prime Minister. Thank you very much indeed.
The Prime Minister
Are we at an end? I'm so sorry.
Brian Walden
We had to … We are, I regret to say, at an end.
The Prime Minister
I'm so sorry.